💸 Seller Closing Costs & What Escrow Does 🏠

Sep/30/2025

When selling your home, there are several costs you’ll likely be responsible for.

Below is a breakdown of the most common ones for a residential sale of a SFD - Single Family Home + role of Escrow. 

Real Estate Agent Commission 💰

• Typically around 5% of the sale price.

• Split between the Listing Agent & Buyer’s Agent.

Home Repairs & Staging 🛠️🛋️

• Repairs: Depends on service required + provider. 

• Staging: Depends on provider, size of property & materials installed. 

• Pre-sale inspection:  Usually recommended to analyze the current condition of your property, including any repairs, deficiencies, or possible upgrades.

Closing Costs 📝

Around 1% of the sale price, typically split between the Buyer & Seller, this usually includes Escrow & Recording fees. 

What Does Escrow Do?

1.  Collects, Holds & Distributes Funds Securely, as a Neutral 3rd Party

Escrow collects any required funds from the Buyer, Lender & Seller, then distributes accordingly to the specified conditions, to all parties involved, normally once the applicable conditions have been met. 

2. Handles Payoff of your Mortgage, if required

Escrow ensures any existing mortgage (or other liens) are paid off / discharged, typically from the sale proceeds, unless otherwise instructed. 

3. Prepares and manages documents

Includes settlement statements, deed transfer, and recording documents etc. 

4. Coordinates with all parties

Works with the Seller, Buyer, Lenders, Title Company, Insurance and Real Estate Agents etc. to ensure all conditions are met.

5. Prorates expenses

Escrow calculates your share of property taxes, HOA dues & utilities etc., up to the sale date, then normally facilitates payoff of any outstanding liabilities. 

6. Distributes proceeds

After all conditions have been met, escrow will release the remaining sale proceeds to you.

For more complex sales, such as trusts, estates, large commercial properties, or unusual contract terms etc., a Real Estate lawyer is advisable as Escrow companies are unable to offer Legal Advice, unless in-house legal counsel is available. 

Title Insurance 🏠

In California, many companies act as both escrow and title company.  If the Title Company is separate, normal duties usually include: 

1. Check the property’s title – ensuring you legally own it and there are no liens or claims.

2. Issue a new title insurance policy for any Lender involved + the new Owner's policy. This type of coverage provides protection against any possible title issues that were not identified or cleared during the sale process, and continues once the home is sold.

3. Prepares legal documents such as deeds, affidavits, and settlement papers etc.

4. Coordinates with escrow – ensuring funds and ownership transfer correctly.

5. Record the deed – officially registers the new owner with the county.

Cost & Who Pays? The Buyer almost always pays for the Lender's side, and the Owner's policy is covered by either the Seller, Buyer or both, depending on what is negotiated, or customary for the area.  In SoCal the Seller typically pays for the new owner's policy and the fee is normally collected through escrow at closing, then paid to the title company involved. 

Typical cost is around $500-$3000, however, depends on property specifics + area & location.  Here is a basic $ Title Insurance cost calculator by State:

https://www.oldrepublictitle.com/rate-calculator

Real Estate Transfer Taxes 💸

County Transfer Tax (Documentary Transfer Tax)

• In Los Angeles County, the base documentary transfer tax is $1.10 per $1,000 of value, which is equivalent to 0.11 %. 

If your property is in the City of LA, then there is an additional city transfer tax on top of the county rate:

• The standard city transfer tax in LA is $4.50 per $1,000, which is 0.45 %.

So, for a typical property under $5,000,000 in the City of LA, the combined rate is:

0.11 % (County) + 0.45 % (City) = 0.56 % total.

In California, this cost is typically paid for by the Seller, unless otherwise negotiated. Here is a basic calculator: 

www.ortconline.com/TransferTaxCalculator

Additional / “Mansion Tax” for High-Value Properties in City of LA:

For high-value property transfers (within City of Los Angeles), there’s an extra tax under Measure ULA that kicks in above certain thresholds:

• For property sales above ~$5,000,000 up to ~$10,000,000, an additional 4.00 % tax applies on top of the base.

• For sales $10,000,000 or more, the additional rate is 5.50 % on the total sale amount.

• Because that extra tax is on top, the effective combined rate for a very high-value property in the City of LA can be 6 %+ (or more, depending on the bracket).

Taxes, Liens & Assessments 🏛️

• Capital Gains Tax (if applicable).

  • Exemption: $250k (single) / $500k (married) for primary residence (Check with your Accountant for exact details in your area & situation) 

• Any judgments, tax liens, or delinquent taxes recorded against the property or seller.

• Property tax proration (up to the transfer date, you could either owe the Buyer, or they may be required to credit you). Here is the LA County website for more info: https://www.propertytax.lacounty.gov/

• Any bonds or assessments (depending on contract).

HOA Fees & Costs 🏘️

• Unpaid HOA dues must be cleared.

• HOA move-out fees (mostly for condos).

• HOA document fees (charged for providing required resale docs).

Required Disclosures & Compliance - depends on area & local laws. 

1. Natural Hazard Zone Disclosure Statement: 

Informs Buyer if the property is in a designated hazard zones (flood, fire, earthquake fault, etc.).

Cost: Usually $75–$150.

Who pays: Seller is responsible & it’s a legal requirement in California for most residential sales.

2. City Report of Residential Record, if required: 

 Informs the Buyer about the property’s legal status, permits, and code    compliance etc. Normal cost around $50-$200. 

3. Energy/Water Conservation & other Compliance Work (per local laws).

Ensures the property meets local building and environmental standards (e.g., solar water heating, energy efficiency, water-saving fixtures).

Cost: Can range from $100–$1,000+, depending on the required work or inspection.

Who pays: Usually Seller, because compliance is typically required before closing.

Optional / Miscellaneous Costs 🔧

• Home Warranty for Buyer (sometimes offered as an incentive, cost will vary by property + provider).

• Notary & courier fees.

• Other miscellaneous charges depending on the property and contract.

Also see my Blog: Costs Associated with Buying a Home 🏡

✅ Summary: Sellers generally cover commissions, transfer taxes, owner's title insurance, loan payoff, unpaid property obligations, and certain closing/disclosure fees. Costs vary depending on location, property type, and contract negotiations.

𝒮𝑒𝒶𝓃 𝐴𝓊𝒿𝓁𝒶, 𝑀𝐵𝐴
𝒮𝑜𝒞𝒶𝐿 ℛ⁄𝐸 & 𝑀𝓉𝑔. 𝐵𝓇𝑜𝓀𝑒𝓇
𝐻𝑜𝓂𝑒𝓈 𝓉𝒽𝒶𝓉 𝓂𝑜𝓋𝑒 𝓎𝑜𝓊 🏠
R𝒾𝓈𝑒 𝑅𝑒𝒶𝓁𝓉𝓎 | 𝒯𝒯𝐻 𝐿𝑜𝒶𝓃𝓈
𝒟ℛ𝐸 𝟢𝟤𝟤𝟣𝟣𝟧𝟨𝟧 | 𝒩𝑀𝐿𝒮 𝟤𝟦𝟪𝟢𝟨𝟫𝟤
https://seanaujla.com/tips

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This Blog was written by: Sean Aujla, MBA - #SoCal Real Estate & Finance Broker - DRE 02211565 | NMLS 2480692.  Not affiliated with any of the companies mentioned in the post. 

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𝒮𝑒𝒶𝓃 𝒾𝓈 𝒶 𝓈𝑒𝒶𝓈𝑜𝓃𝑒𝒹 𝑅𝑒𝒶𝓁 𝐸𝓈𝓉𝒶𝓉𝑒 & 𝐹𝒾𝓃𝒶𝓃𝒸𝑒 𝐵𝓇𝑜𝓀𝑒𝓇 𝒷𝒶𝓈𝑒𝒹 𝒾𝓃 𝓉𝒽𝑒 𝐿𝐴 𝓇𝑒𝑔𝒾𝑜𝓃. 𝐻𝑒 𝑜𝒻𝒻𝑒𝓇𝓈 𝑜𝓋𝑒𝓇 𝓉𝓌𝑜 𝒹𝑒𝒸𝒶𝒹𝑒𝓈 𝑜𝒻 𝑒𝓍𝓅𝑒𝓇𝒾𝑒𝓃𝒸𝑒 & 𝒻𝑜𝒸𝓊𝓈𝑒𝓈 𝑜𝓃 𝓅𝓇𝑜𝓋𝒾𝒹𝒾𝓃𝑔 𝒸𝑜𝓂𝓅𝓇𝑒𝒽𝑒𝓃𝓈𝒾𝓋𝑒 𝓈𝑜𝓁𝓊𝓉𝒾𝑜𝓃𝓈, 𝓉𝒶𝒾𝓁𝑜𝓇𝑒𝒹 𝓉𝑜 𝑒𝒶𝒸𝒽 𝒸𝓁𝒾𝑒𝓃𝓉'𝓈 𝑜𝒷𝒿𝑒𝒸𝓉𝒾𝓋𝑒𝓈 – www.seanaujla.com

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#𝒉𝒐𝒎𝒆𝒔𝒇𝑜𝓇𝓈𝒶𝓁𝑒, #𝒄𝒐𝓃𝒹𝑜𝓈𝒇𝑜𝓇𝓈𝒶𝓁𝑒, #𝒍𝒂𝓇𝑒𝒶𝓁𝓉𝑜𝓇, #𝒍𝒂𝓇𝑒𝒶𝓁𝑒𝓈𝓉𝒶𝓉𝑒, #𝒓𝒆𝒂𝒍𝒆𝓈𝓉𝒶𝓉𝑒𝒶𝑔𝑒𝓃𝓉, #𝒓𝒆𝒂𝓁𝓉𝑜𝓇, #𝒃𝓇𝑜𝓀𝑒𝓇, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒𝒾𝓃𝓋𝑒𝓈𝓉𝑜𝓇, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒𝒷𝓇𝑜𝓀𝑒𝓇, #𝒎𝑜𝓇𝓉𝑔𝒶𝑔𝑒𝒷𝓇𝑜𝓀𝑒𝓇, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒𝓃𝑒𝓌𝓈, #𝒓𝒆𝒂𝓁𝑒𝓈𝓉𝒶𝓉𝑒, #𝒎𝑜𝓇𝓉𝑔𝒶𝑔𝑒, #𝒇𝒾𝓃𝒶𝓃𝒸𝒾𝓃𝑔, #𝒔𝑒𝒶𝓃𝒂𝓊𝒿𝓁𝒶

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#𝓁𝒶, #𝓁𝑜𝓈𝒶𝓃𝑔𝑒𝓁𝑒𝓈, #𝓈𝑜𝒸𝒶𝓁, #𝒸𝒶𝓁𝒾𝒻𝑜𝓇𝓃𝒾𝒶, #𝒷𝑒𝓋𝑒𝓇𝓁𝓎𝒽𝒾𝓁𝓁𝓈, #𝒽𝑜𝓁𝓁𝓎𝓌𝑜𝑜𝒹, #𝒷𝑒𝓁𝒶𝒾𝓇, #𝒷𝑒𝓋𝑒𝓇𝓁𝓎𝑔𝓁𝑒𝓃, #𝒷𝓇𝑒𝓃𝓉𝓌𝑜𝑜𝒹, #𝓈𝒶𝓃𝓉𝒶𝓂𝑜𝓃𝒾𝒸𝒶, #𝑜𝒸𝑒𝒶𝓃𝓅𝒶𝓇𝓀, #𝓋𝑒𝓃𝒾𝒸𝑒, #𝓂𝒶𝓃𝒽𝒶𝓉𝓉𝒶𝓃𝒷𝑒𝒶𝒸𝒽, #𝓂𝒶𝓁𝒾𝒷𝓊, #𝓅𝒶𝒸𝒾𝒻𝒾𝒸𝓅𝒶𝓁𝒾𝓈𝒶𝒹𝑒𝓈, #𝒸𝓊𝓁𝓋𝑒𝓇𝒸𝒾𝓉𝓎, #𝒹𝑒𝓁𝓇𝒶𝓎, #𝓂𝒶𝓇𝓋𝒾𝓈𝓉𝒶, #𝓅𝓁𝒶𝓎𝒶𝓋𝒾𝓈𝓉𝒶, #𝓁𝒶𝓍, #𝒷𝓊𝓇𝒷𝒶𝓃𝓀, #𝑔𝓁𝑒𝓃𝒹𝒶𝓁𝑒, #𝓈𝒽𝑒𝓇𝓂𝒶𝓃𝑜𝒶𝓀𝓈, #𝑒𝓃𝒸𝒾𝓃𝑜, #𝓈𝓉𝓊𝒹𝒾𝑜𝒸𝒾𝓉𝓎, #𝓉𝒶𝓇𝓏𝒶𝓃𝒶, #𝓌𝑜𝑜𝒹𝓁𝒶𝓃𝒹𝒽𝒾𝓁𝓁𝓈, #𝒸𝒶𝓁𝒶𝒷𝒶𝓈𝒶𝓈, #𝒽𝒾𝒹𝒹𝑒𝓃𝒽𝒾𝓁𝓁𝓈, #𝒶𝑔𝑜𝓊𝓇𝒶𝒽𝒾𝓁𝓁𝓈, #𝓌𝑒𝓈𝓉𝓁𝒶𝓀𝑒𝓋𝒾𝓁𝓁𝒶𝑔𝑒, #𝓉𝒽𝑜𝓊𝓈𝒶𝓃𝒹𝑜𝒶𝓀𝓈